Correlation Between Century Therapeutics and Cingulate
Can any of the company-specific risk be diversified away by investing in both Century Therapeutics and Cingulate at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Century Therapeutics and Cingulate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Therapeutics and Cingulate, you can compare the effects of market volatilities on Century Therapeutics and Cingulate and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Century Therapeutics with a short position of Cingulate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Therapeutics and Cingulate.
Diversification Opportunities for Century Therapeutics and Cingulate
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Cingulate is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Century Therapeutics and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate and Century Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Century Therapeutics are associated (or correlated) with Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of Century Therapeutics i.e., Century Therapeutics and Cingulate go up and down completely randomly.
Pair Corralation between Century Therapeutics and Cingulate
Given the investment horizon of 90 days Century Therapeutics is expected to under-perform the Cingulate. But the stock apears to be less risky and, when comparing its historical volatility, Century Therapeutics is 3.63 times less risky than Cingulate. The stock trades about -0.03 of its potential returns per unit of risk. The Cingulate is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 25,440 in Cingulate on August 28, 2024 and sell it today you would lose (24,970) from holding Cingulate or give up 98.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Therapeutics vs. Cingulate
Performance |
| Timeline |
| Century Therapeutics |
| Cingulate |
Century Therapeutics and Cingulate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Therapeutics and Cingulate
The main advantage of trading using opposite Century Therapeutics and Cingulate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Therapeutics position performs unexpectedly, Cingulate can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cingulate will offset losses from the drop in Cingulate's long position.| Century Therapeutics vs. Eliem Therapeutics | Century Therapeutics vs. Scpharmaceuticals | Century Therapeutics vs. Milestone Pharmaceuticals | Century Therapeutics vs. Seres Therapeutics |
| Cingulate vs. SAB Biotherapeutics | Cingulate vs. Senti Biosciences | Cingulate vs. Aerovate Therapeutics | Cingulate vs. Adagene |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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